China Maintains Benchmark Lending Rates Unchanged amid Economic Recovery Signs

According to official data released Monday, China’s benchmark lending rates were kept steady, meeting market expectations following the PBOC’s decision to maintain key policy rates amidst indications of economic improvement.

The one-year loan prime rate remained at 3.45%, while the five-year rate was unchanged at 3.95%, as confirmed by the People’s Bank of China.

The decision to hold the LPR aligns with predictions, especially after the PBOC opted to keep the medium-term lending facility rate steady last week. The MLF rate acts as a reference for LPR, determined by 20 major Chinese banks.

With China exceeding projections for economic growth in the first quarter of the year, with a 5.3% GDP increase from the previous year, Beijing has established an approximately 5.0% growth objective for 2021.

Despite some economists suggesting further interest-rate cuts to support the struggling real estate sector, the current robust economic momentum makes immediate easing less probable.

Additional factors influencing the decision include the pressure on the yuan, along with other Asian currencies, due to the strengthening U.S. dollar. China’s central bank reaffirmed its commitment to a stable currency last week, emphasizing its dedication to maintaining the yuan at a reasonable and balanced level.